Astonea Lab BSE SME IPO review (May apply)

•    The company is engaged in contract manufacturing of pharma and cosmetic products for domestic and export markets.
•    While it marked growth in its top lines, its bottom lines boosted fromFY24 onwards and raised eyebrows.
•    Based on its financial data so far, the issue appears fully priced. 
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Astonea Labs Ltd. (ALL) is engaged in contract manufacturing of pharmaceutical and cosmetic products for companies both within India and internationally. In addition to contract manufacturing, it manufactures and market own products under the brands "Glow Up" and "Regero" in the domestic market, wherein the products under Glow Up are also available through e-commerce platforms like Amazon and Tata 1MG. Further, the Company is planning to launch a new line of skincare products under the brand name "Avicel" in the domestic market. It also exports products directly to countries such as Iraq and Yemen and to further advance export business directly, it has recently undergone an audit by the USFDA for OTC products and have submitted the compliance report. The milestone of USFDA for OTC products is significant as it positions it to expand presence in the United States market and several other countries.

The Company specializes in the manufacturing and marketing of a wide range of pharmaceutical and cosmetic products. These include antibiotic drugs, anti-cold medications, antihistamines, and drugs for diabetes, cardiovascular diseases, gynaecological concerns, analgesics, fungal infections, and multivitamins. ALL also offers products for skin, tooth, and hair care, available in various forms such as gels, ointments, creams, lotions, oils, and serums. All products adhere to the rigorous standards of the pharmaceutical and cosmetics industries. Additionally, it is involved in the trading of certain packing materials and raw materials used in pharmaceutical and cosmetic products. The Company is based in Haryana, India equipped with a state-of-the-art manufacturing facility having a core manufacturing area of 7,500 square meters, meticulously designed and operated in strict conformity with ISO standards. As of the date of filing this offer document, it had 217 employees on its payroll. It also hires contract labour as and when required.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2790000 equity shares of Rs. 10 each to mobilize Rs. 37.67 cr. at the upper cap. The issue opens for subscription on May 27, 2025, and will close on May 29, 2025. ALL has announced a price band of Rs. 128 – Rs. 135 per share. The minimum number of shares to be applied is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.54% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 1.29 cr. for registration in Bolivia – South America, Rs. 5.23 cr. for capex on installation of plant and machinery for ointment production, Rs. 4.95 cr. for advertising, marketing and brand building, 0.68 cr. investment in procuring hardware and software, Rs. 19.75 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Oneview Corporate Advisors Pvt. Ltd., and KFin Technologies Ltd., is the registrar to the issue. Basan Equity Broking Ltd. is the Market Maker as well as a syndicate member. 

Having issued initial equity shares at par value, the company issued further equity shares at a fixed price of Rs. 100 per share in April 2024. It has also issued bonus shares in the ratio of 9 for 10 in March 2024. The average cost of acquisition of shares by the promoters is Rs. 2.65 per share. 

Post-IPO, its current paid-up equity capital of Rs. 7.72 cr. will stand enhanced to Rs. 10.51 cr.  Based on the upper cap of IPO price, the company is looking for a market cap of Rs. 141.90 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 30.18 cr. / Rs. 0.25 cr. (FY22), Rs. 67.26 cr. / Rs. 0.67 cr. (FY23), and Rs. 80.29 cr. / Rs. 3.81 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 4.10 cr. on a total income of Rs. 69.69 cr. Quantum jump in its bottom lines from FY24 onwards raise eyebrows and concern over its sustainability going forward.

For the last three fiscals, the company has reported an average EPS of Rs. 2.85 and an average RoNW of 19.18%. The issue is priced at a P/BV of 6.02 based on its NAV of Rs. 22.41 as of December 31, 2024, but its post-IPO NAV data is missing.

If we attribute FY25 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 25.96. Based on FY24 earnings, the P/E stands at 37.19. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 0.83% (FY22), 0.99% (FY23), 4.75%, (FY24), 5.90% (9M-FY25), and RoCE margins of 6.02%, 10.83%, 22.95%, 18.34% respectively for the referred periods. Its debt at Rs. 24.81 cr. as of December 31, 2024 raise alarm.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Beta Drugs as their listed peer. Itis trading at a P/E of 37.9 (as of May 23, 2025). However, they are truly not comparable on an apple-to- apple basis. 

MERCHANT BANKER’S TRACK RECORD:
This is the 3rd mandate from Oneview Corporate in the last three fiscals, including the ongoing one.  From the last 2 listings so far, all listed with a premium of 90.00% on the listing date.